HOW TO FILE INCOME TAX RETURN ONLINE

E-filing of tax returns has grown manifold in the past 6 years. In 2007-8, less than 22 lakh taxpayers filed their returns online. Last year, more than 2.15 crore taxpayers took the online route. The end of the current financial year is still more than 3 months away but e-returns have already crossed the 2 crore mark. The surge is also due to the new rule that requires taxpayers with an annual income of Rs 5 lakh to file their tax return online.

Filing tax returns online is easy. The average taxpayer won't take more than 30-40 minutes to enter all the details and upload the return. It is also very cost-effective. Tax filing portals charge individual taxpayers anything between Rs 200 to Rs 900 for uploading their tax returns. You can also do it for free on the official website of the income tax department.

Calculate your gross taxable income and the tax payable after all deductions and exemptions. Private portals charge a fee because they hand-hold taxpayers through the process. It's easier and ensures that your tax return is error free. Some e-fling companies even verify your return for a small fee. They check if you have entered correct information and alert you when you are going wrong.

Before you file your returns, check whether the tax you paid has been correctly credited to your name. The Form 26AS has details of the tax deducted on behalf of the taxpayer and can be easily checked online. It is even easier if you have a net-banking account with any of the 35 banks that offer this facility.

Otherwise you can go to the official website of the income tax department and click on "View Your Tax Credit". First-time users will have to register but it takes less than 5 minutes before you can log on and view your details.

Common deductions and exemptions

Your gross taxable income gets reduced by the following deductions and exemptions.

TAX SAVING INVESTMENTS: Under Sec 80C, up to Rs 1 lakh invested in specified products or spent on certain heads is eligible for deduction. See the table below for a checklist.

YOUR SECTION 80C CHECKLIST

Choose the Tax Saving Investment that suits you considering the four basic parameters.

INVESTMENTS ELIGIBLE FOR TAX BENEFITS

OPTION	RETURNS	SAFETY	FLEXIBILITY	LIQUIDITY
PF, Valuntary PF	8.5%	High	High	Withdrawal on retirement.
PPF	Market- linked (8.7% for current year)	Highest	High	Withdrawal possible after fifth year.
5-Year Bank FDs	8.9%	High	Low	Lock-in for five years.
NSCs	8.5%	Highest	Low	Locked in for five or 10 years.
Senior Citizens’ Saving Scheme	9.3%	Highest	Moderate	Lock-in for five years, Interest paid quarterly.
Insurance Policies	6.7%	High	Very Low	Locked in till plan matures.
ULIPs	Market- Linked	Depends on option chosen	High	Partial withdrawals possible
NPS	Market- Linked	Moderate	High	No withdrawals before retirement.
ELSS	Market- Linked	Low	Moderate	Locked in for three Years.

HEALTH INSURANCE: Up to Rs 15,000 premium for self and family and Rs 15,000 for parents (Rs 20,000 if seniors) gets deduction under Sec 80D. Rs 5,000 of the limit can be on medical check-ups.

HOME LOAN REPAYMENT: While principal portion of EMI gets deduction under Sec 80C, interest of up to Rs 1.5 lakh is deductible under Sec 24 (b). Extra deduction of Rs 1 lakh for this year.

EDUCATION LOAN: The interest paid on an education loan from a bank for a full-time course in a recognised institution is fully deductible for up to 8 years.

HOUSE RENT ALLOWANCE: The least of these three is exempt:

1. HRA received
2. Rent paid minus 10 per cent basic pay
3. 50 per cent of basic pay (40 per cent in non-metros)

Expenses eligible for tax benefits:

HOME LOAN REPAYMENT: Principal part of the EMI is deductible under Sec 80C.

SCHOOL FEES: Tuition fees of up to two children in a recognised educational institute.

HOME PURCHASE: Stamp fee and registration of the house is tax deductible.

INCOME FROM SALARY

Salary

Allowances

Perks

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INCOME FROM OTHER SOURCES

Interest

Dividents

Royalty

Lottery winnings

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CAPITAL GAINS

Debt Funds

Stocks and equity funds

Gold

Real estate

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PROPERTY

Rental Income after 30% standard Deduction

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BUSINESS OR PROFESSION

Net Income after deducting expenses

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GROSS TAXABLE INCOME